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CIRCULAR No.32/1998/TT-BTC OF MARCH 17, 1998 GUIDING THE IMPLEMENTATION OF TAX AND STATE BUDGET REMITTANCE POLICIES TOWARDS THE STATE PUBLIC-UTILITY ENTERPRISES

Pursuant to the tax laws and ordinances and the legal documents on the State budget remittances currently in force;

Pursuant to Decree No.56-CP of October 2, 1996 of the Government on the State public-utility enterprises;

The Ministry of Finance hereby guides the implementation of tax and State budget remittance policies towards the State public-utility enterprises as follows:

I. OBJECTS OF APPLICATION:

Subject to this Circular are State enterprises fully meeting the following conditions:

- Being decided as State public-utility enterprises by the ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the People's Committees of the provinces and cities directly under the Central Government, on the basis of the criteria defined in Articles 1 and 2 of Decree No.56-CP of October 2, 1996 of the Government, as State public-utility enterprises.

- Conducting public-utility activities in line with branches and trades registered in their business licenses.

- Applying the regime of accounting books and using accounting documents and vouchers in accordance with the current regulations and conducting separate cost-accounting of public-utility activities from other business activities.

- Registering the payment of taxes and other remittances as prescribed by law.

II. TAXES AND STATE BUDGET REMITTANCES OF VARIOUS KINDS APPLICABLE TO THE STATE PUBLIC-UTILITY ENTERPRISES

All State public-utility enterprises shall have to register and declare taxes and State budget remittances at the tax agencies according to the guidance of this Circular, as follows:

1. Turnover tax:

All State enterprises conducting public-utility activities shall have to declare, register and pay the turnover tax under the Law on Turnover Tax and the Laws on the Amendments and Supplements to a Number of Articles of the Law on Turnover Tax.

The turnover tax exemption and reduction for the public-utility activities as stipulated in Article 6 of Decree No.56-CP of October 2, 1996 shall be considered as follows:

a) The newly established State public-utility enterprises, if fully meeting conditions prescribed by law, shall be considered for tax exemption or reduction under the Law on Domestic Investment Promotion, the Law on Turnover Tax and the Laws on the Amendments and Supplements to a Number of Articles of the Law on Turnover Tax.

b) For State enterprises currently engaged in public-utility activities, apart from their public-utility activities which are temporarily exempt from the turnover tax as provided for in the Law on Turnover Tax and the Law on the Amendments and Supplements to a Number of Articles of the Law on Turnover Tax, the other public-utility activities, if being unable to cover the cost of production or service supply, shall be considered for turnover tax exemption or reduction corresponding to the loss, but not exceeding 50% of the annual payable turnover tax amount.

In order to create grounds for considering the turnover tax reduction according to the above said guidance, at the end of each fiscal year, a State public-utility enterprise shall submit a dossier of tax reduction application to the tax agency directly managing it. A dossier of tax reduction application shall comprise:

- An application for the turnover tax reduction clearly stating the reason(s) therefor;

- The enterprise's annual financial statement already approved by the competent agency;

- The enterprise's annual tax final settlement report.

The order, procedures and competence for consideration of turnover tax reduction shall comply with the guidance in Part D, Section III of Circular No.97-TC/TCT of December 30, 1995 of the Ministry of Finance.

2. Profit tax:

All State public-utility enterprises that have taxable profits shall have to declare and pay the profit tax in accordance with the Law on Profit Tax and the Law on the Amendments and Supplements to a Number of Articles of the Law on Profit Tax.

The profit tax reduction for State public-utility enterprises as stipulated in Point 2a, Article 5 of Decree No.56-CP shall be considered as follows:

a) The newly established State public-utility enterprises which fully meet conditions prescribed by law shall be considered for tax exemption or reduction in accordance with the Law on Domestic Investment Promotion, the Law on Profit Tax and the Law on the Amendments and Supplements to a Number of Articles of the Law on Profit Tax.

b) A State public-utility enterprise, which is additionally allocated capital corresponding to public-utility tasks assigned to it and earns profits, shall be considered for profit tax reduction equal to the amount of additionally allocated capital, but the maximum tax reduction must not exceed 50% of the payable profit tax amount in the tax reduction year.

The procedures and order for consideration of tax exemption and reduction:

In order to create a basis for the consideration of tax reduction, an enterprise shall have to submit a dossier of tax reduction application to the competent tax agency, comprising:

- A tax reduction application with certification by the tax agency directly managing the enterprise regarding the fact that the enterprise is fully qualified for being considered for tax reduction and the amount thereof;

- The decision approving the enterprise's additional capital issued by the competent State agency;

- The annual financial statement and the annual tax final settlement report of the enterprise.

Within 30 days from the date of receiving the dossiers, the tax agency directly managing the enterprise shall have to examine data and facts related to the profit tax reduction, then settle all cases falling under its competence; for cases which are beyond its competence, it shall send written comments and petitions together with the dossiers on tax reduction application to the higher-level tax agency for consideration and decision. The dossiers and documents on tax reduction consideration must be the original ones, in cases where the dossiers include copies, such copies must be certified and sealed by the concerned enterprises on each page.

The competence to consider tax reduction:

Tax agencies of all levels shall have to examine then decide or propose the higher-level agencies to decide the tax reduction on the case by case basis according to competence as follows:

- The directors of provincial/municipal taxation departments shall consider and decide the tax reduction amounts of up to VND 100 million;

- The General Director of the General Taxation Department shall consider and decide the tax reduction amounts of over VND 100 million to VND 500 million.

- The Minister of Finance shall consider and decide the tax reduction amounts of over VND 500 million.

If an enterprise, after being given tax reduction according to this Circular, still fails to fully acquire the approved additional capital, the State shall consider and make additional allocation of capital, making up for the deficit of the approved amount of additional capital.

3. For revenues collected according to the prices, price brackets or charges set by the State without any expenses for production or services:

The State public-utility enterprises that have revenues collected according to the prices, price brackets or charges set by the State without any expenses for production or services shall, after deducting their management expenses, taxes and funds under the current regime, have to remit the remaining revenue amount to the State budget.

The tax agency(ies) that directly manage the enterprises shall have to urge, inspect and guide such enterprises in fulfilling their State budget remittance obligation as prescribed by law and under this Circular's guidance. To ensure the timely remittance of revenues into the State budget, the tax agency(ies) directly managing the enterprises shall conduct monthly inspection of the actual revenues and expenses of the enterprises, then temporarily collect the difference between the revenues and the expenses for the State budget, but the maximum temporary collection must not exceed 70% of the determined difference.

4. Other taxes and State budget remittances applicable to the State public-utility enterprises shall be paid in accordance with the current law provisions.

III. ORGANIZATION OF IMPLEMENTATION

This Circular takes effect 15 days after its signing. The previous guidances on taxes and State budget remittances applicable to the State public-utility, which are contrary to this Circular's guidance, are now annulled. Any problems arising in the course of implementation shall be promptly reported by enterprises and tax agencies to the Ministry of Finance for study and appropriate guidance.

For the Minister of Finance

Vice Minister

VU MONG GIAO